Berezovsky v. Bank of America, No. 16-15066 (9th Cir. 2017)
Annotate this CaseThe Ninth Circuit affirmed summary judgment for Freddie Mac in a quiet title action brought by a plaintiff who purchased real property in a homeowners association foreclosure sale. Plaintiff argued that the Nevada superpriority lien provision empowered the association to sell the home to him free of any other liens or interests, priority status aside. The panel held that the district court did not err in concluding that the Federal Foreclosure Bar superseded the Nevada superpriority lien provision. Although the recorded deed of trust here omitted Freddie Mac's name, Freddie Mac's property interest was valid and enforceable under Nevada law. The panel explained that, because Freddie Mac possessed an enforceable property interest and was under the agency's conservatorship at the time of the homeowners association foreclosure sale, the Federal Foreclosure Bar served to protect the deed of trust from extinguishment. Freddie Mac continued to own the deed of trust and the note after the sale to plaintiff.
Court Description: Federal Foreclosure Bar. The panel affirmed the district court’s summary judgment in favor of the Federal Home Loan Mortgage Corporation, or Freddie Mac, in a quiet title action brought by a plaintiff who purchased real property at a homeowners association foreclosure sale. The plaintiff argued that the Nevada superpriority lien provision, Nev. Rev. Stat. § 116.3116, empowered the homeowners association to sell the property to him free of any other liens or interests, priority status aside. Freddie Mac is under Federal Housing Finance Agency conservatorship. The panel held that the Federal Foreclosure Bar’s prohibition on nonconsensual foreclosure of Agency assets preempted Nevada law, invalidating any purported extinguishment of Freddie Mac’s interest through the association foreclosure sale. First, the panel held that the Federal Foreclosure Bar applies to private association foreclosures generally, and does not protect the Agency’s property only from state and local tax liens. The panel rejected the plaintiff’s argument that the Federal Foreclosure Bar did not apply specifically to this case because Freddie Mac and the Agency implicitly consented to the foreclosure when they took no action to stop the sale. In analyzing preemption, the panel began with a presumption against preemption because real estate foreclosure traditionally is an area regulated by state law. 4 BEREZOVSKY V. BANK OF AMERICA The panel held that the presumption was rebutted because Congress had made its intent to supersede state law clear and manifest. The panel concluded that the Federal Foreclosure Bar implicitly demonstrated a clear intent to preempt Nevada’s superpriority lien law by expressly prohibiting foreclosures on Agency property without consent. Because the federal and state statutes impliedly conflicted, the Federal Foreclosure Bar superseded the Nevada superpriority lien provision. The panel held that, under Nevada law, Freddie Mac proved that it held an enforceable property interest, and therefore was entitled to summary judgment even though the recording document listed the deed-of-trust beneficiary but not the note owner, Freddie Mac. The note was thus “split” from the deed of trust, but due to Freddie Mac’s agency relationship with the recorded beneficiary, Freddie Mac remained a secured creditor with a property interest in the collateral.
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